**Exhibit 10.39**

 

**TODHUNTER INTERNATIONAL, INC.**

**222 Lakeview Avenue, Suite 1500**

**West Palm Beach, FL 33401**

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**ENDORSEMENT SPLIT-DOLLAR AGREEMENT**

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**THISENDORSEMENT SPLIT-DOLLAR AGREEMENT** (this “Agreement”) is entered into this **20th day of February 2004**,by and between Todhunter International, Inc., a Delaware corporation (the“Corporation”) and **Thomas A. Valdes** (the “Executive”).

 

**WITNESSETH:**

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**WHEREAS**,the Executive is employed by the Corporation; and

 

**WHEREAS**, the Corporation recognizes the valuableservices performed by the Executive and wishes to encourage his continuedemployment; and

 

**WHEREAS**, the Corporation is desirous of providingprotection for the beneficiaries of Executive in the event of his untimelydeath; and

 

**WHEREAS**, The Corporation has applied for, and isthe owner of Life Insurance Policy Number 10034391 (the “Policy”) in thespecified face amount of **$1,000,000** from the Lincoln NationalLife Insurance Company (the “Insurer”); and

 

**WHEREAS**, it is understood and agreed that thisAgreement is to be considered effective as of the date on which the Policy wasissued by the Insurer or the date of execution of this Agreement whichever islater.

 

**NOWTHEREFORE**, inconsideration of the premises and of the mutual promises herein contained, theparties hereto agree as follows:

 

**1.****            ****Ownership Rights In The Policy**.

 

A.            The Corporation shall have all of the ownershiprights, options and privileges permitted by the Policy except those expresslygranted to the Executive by the terms of this Agreement.

 

B.            The Corporation has the right to borrow or topledge the cash surrender value of the Policy to the extent of its interestspecified in Paragraph 1.C., and as permitted by the terms of the Policy. TheCorporation’s interest in the cash surrender value of the Policy at any timeduring the Executive’s lifetime, or at death, shall be adjusted to reflect anyindebtedness on or secured by the Policy which is attributable to borrowing byor on behalf of the Corporation (including any interest due on suchindebtedness).

 

C.            The Corporation shall have the right to designateitself as beneficiary of the Policy, to the extent of the difference betweenthe total death benefit paid under the life insurance contract and the amountdesignated in Paragraph 1.D., below, provided such amount is reduced by anyindebtedness (on or secured by the Policy) which is attributable to borrowingby or on behalf of the Corporation (including any interest due on suchindebtedness) and/or any withdrawals by or on behalf of the Corporation.

 

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D.            The Corporation hereby endorses to the Executivepolicy death benefits in the amount of **$1,000,000** which shall be payable tothe Executive’s estate if the Executive dies while this Agreement is inforce.  The Corporation and theExecutive’s estate may select a settlement option as provided in the Policy atthe time of distribution.

 

E.             The Corporation may not take any action withrespect to the Policy that will impair any right or interest of the Executivein the Policy.

 

**2.****            ****Premium Payments**.  Onor before the due date of each Policy premium, or within the grace periodprovided therein, the Corporation shall pay the full amount to the Insurer.

 

**3.****            ****Division of Death Proceeds ofPolicy**.  In the event that theExecutive shall die while this Agreement is in force, the Corporation shall beentitled to receive from the Policy proceeds an amount equal to theCorporation’s interest in the Policy, as determined under Paragraph 1.C. ofthis Agreement. The portion of the Policy proceeds which is in excess of theamount paid to the Corporation shall be paid to the Executive’s estate inaccordance with the terms of the Policy and Paragraph 1.D. of this Agreement.

 

**4.****            ****Waiver of Premium**.  Upon theunanimous agreement of the Corporation and the Executive, the Corporation shallapply to the Insurer for a supplemental agreement providing for the waiver ofpolicy premiums in the event of the Executive’s disability. The Corporationshall pay any additional premium attributable to such an agreement.

 

**5.****            ****Choice of Dividend Options**.  To theextent the Insurer declares dividends on the Policy, the Corporation shall havethe right to choose the option or combination of options it desires from amongthose offered by the Insurer. The Corporation shall notify the Insurer of itschoice.

 

**6.****            ****Termination of Agreement**.

 

A.            This Agreement shall be cancelled and shallterminate upon the termination of the Executive’s employment with theCorporation for any reason other than the Executive’s disability as defined inParagraph 3 of the Salary Continuation Plan Agreement between the Corporationand the Executive dated **February 20, 2004** (the “SalaryContinuation Plan Agreement”).   Uponsuch termination, the Executive shall have a 60-day option to pay theCorporation an amount equal to the Corporation’s interest in the Policy underParagraph 1.C. in return for the Corporation’s release of any claim to thepolicy. If, within the 60-day period following the cancellation of thisAgreement, the Executive fails to exercise said option, then the Executive shallbe deemed to have relinquished all rights in the Policy and the Corporationwill be free to surrender or take any other action with respect to the Policyas it may desire. If the Executive fails to pay the Corporation within the60-day option period, the Executive agrees upon request of the Corporation toexecute any and all instruments that may be required to transfer all right,title, and interest in the Policy to the Corporation.

 

B.            Notwithstanding Paragraph 6.A., in the event theExecutive dies during his employment with the Corporation, this Agreement shallbe cancelled and shall terminate upon the payment of the death proceeds of thePolicy to the Executive’s estate in accordance with Paragraph 1.D. andParagraph 3 of this Agreement.

 

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**7.****            ****Termination of this Agreement inConnection with a Change in Control**.

 

A.            Notwithstanding anything in this Agreement to thecontrary, unless the Executive is terminated “for cause,” as defined inParagraph 10.C. of this Agreement, the Corporation may not terminate thisAgreement without the consent of the Executive during the period beginning nine(9) months before a Change in Control (as defined below); provided however,this Agreement shall be cancelled and shall terminate once the Executive becomeentitled to receive payment of the retirement benefit in accordance withParagraph 1 of the Salary Continuation Plan Agreement.

 

B.            For the purpose of this Agreement, a “Change ofControl” shall mean any of the following events:

 

(i)            Theacquisition by any person, entity or “group” required to file a Schedule 13D orSchedule 14D-1 promulgated under the Securities Exchange Act of 1934, asamended (the “Exchange Act”) (excluding, for this purpose, any of the followingthat acquires beneficial ownership of voting securities of the Corporation,including shares acquired pursuant to the exercise of options or warrants, orconversion of preferred stock outstanding as of the date hereof: (a) CLFinancial, Ltd., Angostura Ltd., or any of their affiliates; (b) theCorporation, its affiliates or subsidiaries; (c) V&S Vin & Spirit AB,its affiliates or subsidiaries, solely in connection with a transaction withthe Corporation, its affiliates or subsidiaries approved by the Board of Directors;or (d) any employee benefit plan of the Corporation, or its affiliates orsubsidiaries), of beneficial ownership (within the meaning of Rule 13d-3promulgated under the Exchange Act) of over 40% (in one or more transactions,in the aggregate) of either the then outstanding shares of common stock or thecombined voting power of the Corporation’s then outstanding voting securitiesentitled to vote generally in the election of directors; or

 

(ii)           An election orappointment to the Board of Directors by virtue of which the individuals whoimmediately prior thereto constituted the Board of Directors (the “IncumbentBoard”) no longer constitute at least a majority of the Board of Directors(other than an election or appointment of a director or directors precipitatedby CL Financial, Ltd., Angostura Ltd., V&S Vin & Spirit AB, or any oftheir affiliates, or by the Board of Directors if at that time at least amajority are individuals who are directors on the date hereof), provided thatany person who becomes a director subsequent to the date hereof whose election,or nomination for election by the Corporation’s stockholders, was approved by avote of at least a majority of the Incumbent Board (other than an election ornomination of an individual whose initial assumption of office is in connectionwith an actual or threatened election contest relating to the election of theDirectors of Employer, as such terms are used in Rule 14a-1 promulgated underthe Exchange Act) shall be, for purposes of this Agreement, considered asthough such person were a member of the Incumbent Board; or

 

(iii)          Approval by thestockholders of the Corporation of: (a) a reorganization, merger orconsolidation by reason of which persons who were the stockholders of theCorporation immediately prior to such reorganization, merger or consolidationdo not, immediately thereafter, own more than fifty percent (50%) of thecombined voting power entitled to vote generally in the election of directorsof the reorganized, merged or consolidated company’s then outstanding votingsecurities; or (b) a liquidation or dissolution of the Corporation or the saleof all or substantially all of the assets of the Corporation, whether suchassets are held directly or indirectly (excluding the currently proposed jointventures with affiliates of CL Financial, Ltd. and/or V&S Vin & SpiritAB, if such transactions constitute a sale of substantially all of the assetsof Employer).

 

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C.            The definition of “for cause” termination shall bethe same as set forth in the employment agreementbetween the Executive and the Corporation in effect as of the date of thisAgreement.  In the event there is noemployment agreement between the Executive and the Corporation on the date ofthis Agreement, “cause” for termination shall mean that (a) theExecutive is convicted of a felony which, in the sole determination of theBoard of Directors, would have a material adverse effect on the Executive’sability to perform his duties hereunder or on the business or reputation of theCorporation; (b) the Executive has exhibited gross misconduct resulting inmaterial harm to the Corporation, its business or reputation; (c) the Executivehas willfully misappropriated the Corporation’s assets or has otherwisewillfully defrauded the Corporation, including without limitation by fraud,theft, embezzlement, or breach of a fiduciary duty involving personal profit.  For purposes of this paragraph, no act orfailure to act on the Executive’s part shall be considered “willful” unlessdone, or omitted to be done, by him not in good faith and without reasonablebelief that his action or omission was in the best interests of the Corporation.

 

**8.****            ****Amendment**.  ThisAgreement may be amended at any time and from time to time, by a writteninstrument signed by the Corporation and the Executive.

 

**9.****            ****Binding Effect**.  All ofthe terms and provisions of this Agreement shall be binding upon, inure to thebenefit of, and be enforceable by the parties and their respectiveadministrators, personal representatives, legal representatives, heirs,successors and permitted assigns, whether so expressed or not.

 

**10.****         ****Notices**.  Anynotice, consent or demand required or permitted to be given under theprovisions of this Agreement shall be in writing, and shall be signed by theparty giving or making the same.  Ifsuch notice, consent or demand is mailed to a party hereto, it shall be sent byUnited States certified mail, postage prepaid, addressed to such party’s lastknown address as shown on the records of the Corporation. The date of suchmailing shall be deemed the date of notice, consent or demand.

 

**11.****         ****Insurer Not a Party to Agreement**.  TheInsurer shall not be deemed a party to this Agreement. Payment or otherperformance of its contractual obligations in accordance with the Policyprovisions shall fully discharge the Insurer from any and all liability.

 

**12.****         ****Named Fiduciary**.  TheCorporation is hereby designated the “Named Fiduciary” as such term is definedin the Employee Retirement Income Security Act of 1974, as amended(“ERISA”).  As Named Fiduciary, theCorporation shall be responsible for the management and administration of theterms of this Agreement. The Corporation’s Board of Directors may delegate toothers the management and operating responsibilities of the plan including theemployment of advisors and may exercise any other powers necessary for thedischarge of its duties to the extent not in conflict with the provisions ofERISA.

 

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**13.****         ****Claim Procedure**.

 

A.            If the Executive or his personal representativebelieves that he is being denied a benefit to which he is entitled under thisAgreement (hereinafter referred to as a “Claimant”), such Claimant may file awritten request for such benefit with the Corporation setting forth hisclaim.  The request must be addressed tothe President of the Corporation at its then principal place of business.

 

B.            The Corporation shall reply to the Claimant’s claimwithin ninety (90) days of receiving the claim.  If the claim is denied in whole or in part, the Corporation shalladopt a written opinion, using language calculated to be understood by theClaimant, setting forth:

 

(i)            The specific reason or reasons for such denial;

 

(ii)           The specific reference to pertinent provisions ofthis Agreement on which such denial is based;

 

(iii)          A description of any additional material orinformation necessary for the Claimant to perfect his claim and an explanationwhy such material or such information is necessary;

 

(iv)          Appropriate information as to the steps to be takenif the Claimant wishes to submit the claim for review; and

 

(v)           The time limits for requesting a review undersubsection C. and for review under subsection D. hereof.

 

C.            Within sixty (60) days after the receipt by theClaimant of the written opinion described above, the Claimant may request inwriting that the Secretary of the Corporation review the determination of theCorporation. Such request must be addressed to the Secretary of theCorporation, at its then principal place of business. The Claimant or his dulyauthorized representative may, but need not, review the pertinent documents andsubmit issues and comments in writing for consideration by the Corporation. Ifthe Claimant does not request a review of the Corporation’s determination bythe Secretary of the Corporation within such sixty (60) day period, he shall bebarred and estopped from challenging the Corporation’s determination.

 

D.            Within sixty (60) days after the Secretary’sreceipt of a request for review, he will review the Corporation’sdetermination. After considering all materials presented by the Claimant, theSecretary will render a written opinion, written in a manner calculated to beunderstood by the Claimant, setting forth the specific reasons for the decisionand containing specific references to the pertinent provisions of thisAgreement on which the decision is based. If special circumstances require thatthe sixty (60) day time period be extended, the Secretary will so notify theClaimant and will render the decision as soon as possible, but no later thanone hundred twenty (120) days after receipt of the request for review.

 

**14.****         ****Governing Law**.  ThisAgreement and all transactions contemplated by this Agreement shall be governedby, and construed and enforced in accordance with, the internal laws of theState of Florida without regard to principles of conflicts of laws.

 

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**15.****         ****Jurisdiction and Venue**.  Theparties acknowledge that a substantial portion of the negotiations, anticipatedperformance and execution of this Agreement occurred or shall occur in PalmBeach County, Florida.  Any civil actionor legal proceeding arising out of or relating to this Agreement shall bebrought in the courts of record of the State of Florida in Palm Beach County orthe United States District Court, Southern District of Florida.  Each party consents to the jurisdiction ofsuch Florida court in any such civil action or legal proceeding and waives anyobjection to the laying of venue of any such civil action or legal proceedingin such Florida court.  Service of anycourt paper may be effected on such party by mail, as provided in thisAgreement, or in such other manner as may be provided under applicable laws,rules of procedure or local rules.

 

**IN WITNESSWHEREOF**, the partieshereto have set their hands on the day and year first hereinabove written.

 

 

**TODHUNTERINTERNATIONAL, INC.**

 
| By: | /s/ Jay S. Maltby | , Chairman & CEO |
|-----|-------------------|---------------------------|

 

**EXECUTIVE**

 
| By:    | /s/ Thomas A. Valdes | , Executive Vice  President Todhunter International, Inc. and |
|--------|----------------------|--------------------------------------------------------------------|
|   |                 | President Cruzan Ltd.                                              |
|        |                      |                                                                    |  |

 

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